Screwfix set to expand following omnichannel sales growth
The Screwfix tradecounter business is set to see store numbers grow by almost a third thanks to what parent company Kingfisher describes as its "leading omnichannel offer [that] continues to deliver strong growth."
Kingfisher , which in the UK owns both DIY retailer B&Q and tradecounter Screwfix , said today in its half-year results that it saw potential for the Screwfix estate to grow to 600 stores from the existing 412. In the six months to August 1, Screwfix sales grew by 27.9% to £494m. When the effect of store openings and closures is stripped out, like-for-like sales grew by 16.5%. This, said Kingfisher, was "driven by strong growth from the specialist trade desks exclusive to plumbers and electricians within Screwfix outlets, strong digital and mobile growth, new and extended ranges, alongside the continued roll out of new outlets."
Screwfix is also expanding into Germany, with a trial that, Kingfisher said today, is on track. "Although it is still early days," it said in its results statement, "the concept has been well received and we are seeing good signs of repeat business from a growing number of customers both in store and online." The retailer currently has four outlets in Germany and plans another five this year.
The Screwfix expansion plans were announced as part of an update into Kingfisher's journey to transform into one omnichannel retailer operating across its European markets.
The business concluded in a strategy review earlier this year that in a home improvement market where there is no potential for growth and "no one clear winning format or channel," the company could achieve "significant benefits" from bringing its disparate operations together and standardising processes.
Now the strategic emphasis is on putting customer needs first, offering a unique offer that presents the same low cost products to shoppers across Europe in the same way. That uniform approach will include a limited number of formats: big box, medium box and omnichannel.
At B&Q, half-year sales grew by 0.2% to £2bn, (+0,7%, like-for-like). Kingfisher said that online sales, both for home delivery and through its click, pay and collect service on more than 14,000 products, were making good progress. Some 15% of B&Q space that has been identified as surplus, or 60 B&Q stores, is set to close. A further six stores will be right-sized.
Chief executive Véronique Laury said she was pleased with "solid" progress in the first half of the year, including with the plan to create 'one' Kingfisher across markets. "This plan will unlock our potential through organising ourselves very differently in order to create a single, unified company where customer needs come first," she said, adding: "There remains a lot to be done however. Our leadership team is now complete and we are continuing to develop our detailed plans at pace as we progress on this exciting journey."
The update came as Kingfisher reported sales of £5.49bn in the half-year to August 1 2015, 4.7% down on sales of £5.77bn reported at the same time last year. Pre-tax profits of £377m, before exceptional items, were 1.6% down on last year's £383m. In the UK and Ireland alone, retail profits grew by 16.8%.
Commenting on the Screwfix plans, Daniel Todaro, MD of field marketing agency Gekko
, said: “Following a fall in profits, the refocus from Kingfisher shows a changing attitude towards DIY with consumers gradually moving away from DIY, relying more on the trade for household projects.
“However, the in store DIY environment shouldn’t be abandoned completely. Despite the rise of click and collect, recent research from Gekko shows that nearly two thirds (64 per cent) still go in store for DIY goods that they have to choose carefully. B&Q streamlining its product range is a cost control measure, but it could also help the brand refocus its efforts for those that do want to pick-up a paint brush and refurbish their home.
“The 7,000 products sold last year from a range spanning 393,000 shows that B&Q require a more targeted approach for what their customers actually need and the brands they want which could assist in increasing profitability. It’s an opportunity to build the knowledge amongst staff of core products and brands that matter to DIY enthusiasts.
“With employees not having to spread their understanding as thinly, they will be able to be more targeted in providing a personalised in-store experience and leave consumers less confused by excessive choice.”